Visualized: A Global Risk Assessment of 2021 And Beyond
Risk is all around us. After the events of 2020, it’s not surprising that the level and variety of risks we face have become more pronounced than ever.
Every year, the World Economic Forum analyzes the top risks in the world in its Global Risks Report. Risks were identified based on 800+ responses of surveyed leaders across various levels of expertise, organizations, and regional distribution.
Which risks are top of mind in 2021?
The World’s Top Risks by Likelihood and Impact
According to WEF’s risk assessment methodology, all the global risks in 2021 fall into the following broad categories:
- 🔵 Economic
- 🟢 Environmental
- 🟠 Geopolitical
- 🔴 Societal
- 🟣 Technological
It goes without saying that infectious diseases have now become one of the top societal risks on both metrics of likelihood and impact.
That said, environmental risks continue to dominate the leaderboard, accounting for five of the top 10 risks by impact, especially when it comes to climate action failure.
Several countries are off-track in meeting emissions goals set by the Paris Climate Agreement in 2015, while the pandemic has also delayed progress in the shift towards a carbon-neutral economy. Meanwhile, biodiversity loss is occurring at unprecedented rates.
|Rank||Top Risks by Likelihood||Top Risks by Impact|
|#1||🟢Extreme weather||🔴Infectious diseases|
|#2||🟢Climate action failure||🟢Climate action failure|
|#3||🟢Human environmental damage||🟠Weapons of mass destruction|
|#4||🔴Infectious diseases||🟢Biodiversity loss|
|#5||🟢Biodiversity loss||🟢Natural resource crises|
|#6||🟣Digital power concentration||🟢Human environmental damage|
|#7||🟣Digital inequality||🔴Livelihood crises|
|#8||🟠Interstate relations fracture||🟢Extreme weather|
|#9||🟣Cybersecurity failure||🔵Debt crises|
|#10||🔴Livelihood crises||🟣IT Infrastructure breakdown|
As for other risks, the prospect of weapons of mass destruction ranks in third place for potential impact. In the global arms race, a single misstep would trigger severe consequences on civil and political stability.
New Risks in 2021
While many of the risks included in the Global Risks Report 2021 are familiar to those who have read the editions of years past, there are a flurry of new entries to the list this year.
Here are some of the most interesting ones in the risk assessment, sorted by category:
COVID-19 has resulted in a myriad of knock-on societal risks, from youth disillusionment and mental health deterioration to livelihood crises. The first two risks in particular go hand-in-hand, as “pandemials” (youth aged 15-24) are staring down a turbulent future. This generation is more likely to report high distress from disrupted educational and economic prospects.
At the same time, as countries prepare for widespread immunization against COVID-19, another related societal risk is the backlash against science. The WEF identifies vaccines and immunization as subjects susceptible to disinformation and denial of scientific evidence.
As monetary stimulus was kicked into high gear to prop up markets and support many closed businesses and quarantined families, the economic outlook seems more fragile than ever. Debt-to-GDP ratios continue to rise across advanced economies—if GDP growth stagnates for too long, a potential debt crisis could see many businesses and major nations default on their debt.
With greater stress accumulating on a range of major industries such as travel and hospitality, the economy risks a build-up of “zombie” firms that drag down overall productivity. Despite this, market valuations and asset prices continue to rise, with equity markets rewarding investors betting on a swift recovery so far.
Last but not least, COVID-19 has raised the alert on various technological risks. Despite the accelerated shift towards remote work and digitalization of entire industries, the reality is that digital inequality leaves those with lower digital literacy behind—worsening existing inequalities.
Big Tech is also bloating even further, growing its digital power concentration. The market share some companies hold in their respective sectors, such as Amazon in online retail, threatens to erode the agency of other players.
Assessing the Top 10 Risks On the Horizon
Back in mid-2020, the WEF attempted to quantify the biggest risks over an 18-month period, with a prolonged economic recession emerging on top.
In this report’s risk assessment, global risks are further classified by how soon their resulting threats are expected to occur. Weapons of mass destruction remain the top risk, though on a much longer scale of up to 10 years in the future.
|#1||🟠Weapons of mass destruction||62.7||Long-term (5-10 years)|
|#2||🔴Infectious diseases||58||Short-term risks (0-2 years)|
|#3||🔴Livelihood crises||55.1||Short-term risks (0-2 years)|
|#4||🔵Asset bubble burst||53.3||Medium-term risks (3-5 years)|
|#5||🟣 IT infrastructure breakdown||53.3||Medium-term risks (3-5 years)|
|#6||🔵Price instability||52.9||Medium-term risks (3-5 years)|
|#7||🟢Extreme weather events||52.7||Short-term risks (0-2 years)|
|#8||🔵Commodity shocks||52.7||Medium-term risks (3-5 years)|
|#9||🔵Debt crises||52.3||Medium-term risks (3-5 years)|
|#10||🟠State collapse||51.8||Long-term (5-10 years)|
Through this perspective, COVID-19 (and its variants) remains high in the next two years as the world scrambles to return to normal.
It’s also clear that more economic risks are taking center stage, from an asset bubble burst to price instability that could have a profound effect over the next five years.
Ranked: The World’s 50 Top Countries by GDP, by Sector Breakdown
This graphic shows GDP by country, broken down into three main sectors: services, industry, and agriculture.
Visualized: The Three Pillars of GDP, by Country
Over the last several decades, the service sector has fueled the economic activity of the world’s largest countries. Driving this trend has been changes in consumption, the easing of trade barriers, and rapid advancements in tech.
We can see this in the gross domestic product (GDP) breakdown of each country, which gets divided into three broad sectors: services, industry, and agriculture.
The above graphic from Pranav Gavali shows GDP by country, and how each sector contributes to an economy’s output, with data from the World Bank.
Drivers of GDP, by Country
As the most important and fastest growing component of GDP, services make up almost 60% of GDP in the world’s 50 largest countries. Following this is the industrial sector which includes the production of raw goods.
Below, we show how each sector contributes to GDP by country as of 2021:
|🇰🇷 South Korea||57.0||32.4||1.8||8.8||$1.8|
|🇸🇦 Saudi Arabia||46.5||44.7||2.7||6.1||$0.8|
|🇭🇰 Hong Kong||89.7||6.0||0.1||4.3||$0.4|
|🇿🇦 South Africa||63.0||24.5||2.5||10.0||$0.4|
Industrial sector includes construction. Agriculture sector includes forestry and fishing. *Data as of 2019.
In the U.S., services make up nearly 78% of GDP. Apart from Hong Kong, it comprises the highest share of GDP across the world’s largest economies. Roughly 80% of American jobs in the private sector are in services, spanning from healthcare and entertainment to finance and logistics.
Like America, a growing share of China’s GDP is from services, contributing to almost 54% of total economic output, up from 44% in 2010. This can be attributed to rising incomes and higher productivity in the sector as the economy has grown and matured, among other factors.
In a departure from the top 10 biggest countries globally, agriculture continues to drive a large portion of India’s GDP. India is the world’s second largest producer of wheat and rice, with agriculture accounting for 44% of the country’s employment.
While the services sector has grown in India, it makes up a greater share in other emerging economies such as Brazil (58%), Mexico (59%), and the Philippines (61%).
Services-led growth has risen faster than manufacturing across many developing nations, underpinned by productivity growth.
This structural shift is seen across economies. In many countries in Africa, for instance, jobs have increasingly moved from agriculture to services and trade, where it now accounts for 42% of jobs.
These growth patterns are supported by rising incomes in developing economies, while innovation in tech is lowering barriers to enabling service growth. As the industrial sector makes up a lower share of trade and economic activity, the service sector is projected to make up 77% of global GDP by 2035.
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